Australia's trade surplus down to $8.8bn in April

Australia's trade surplus moved down to $8.8bn in April from its record high reached in the month prior. Export earnings posted their sharpest monthly fall in 11 years, while the contraction on imports in April was the steepest in 36 years. 

International Trade — April | By the numbers

• Australia's trade surplus declined by $1.65bn in April to $8.8bn, which outperformed expectations for a sharper fall to $7.5bn. March's initially reported trade surplus of $10.6bn was revised down slightly to $10.45bn.

• Export earnings were down by 11.3% in April — their largest fall in percentage terms in a single month in 11 years — coming in at $37.51bn to swing the annual pace from 7.4% to -6.5%. 
• Spending on imports continues to fall at pace with a 9.8% contraction coming through in April to $28.71bn, which left the level down 19.3% on a year earlier — its weakest outturn on record.

International Trade — April | The details

The trade surplus moved down fairly sharply in April, with the falls on exports (-11.3%) and imports (-9.8%) in the month highlighting the scale of disruption caused by the COVID-19 pandemic. However, at $8.8bn April's surplus was the second strongest on record and came a month after March's surplus printed at a series high of $10.45bn, with these data going back to the early 1970s.

On the export side, the 11.3% fall (-$4.76bn) mostly centred on weakness in goods (-10.9% or -$3.83bn), though services also weakened sharply (-13.2% or -$0.92bn). Non-rural goods fell by 8.0% in the month (-$2.19bn) led by a heavy fall in iron ore (-9%) that looked to be mostly due to weaker prices. Non-monetary gold is highly volatile from month to month and it swung negative in April falling by $1.69bn after surging in the month prior ($2.47bn). Rural goods posted a modest rise of 0.9% to be up by 3.2% through the year in a sign that the effects of the drought on the sector were easing. Leading the decline on services exports was inbound tourism that plunged by 18.1% in April (-41.5%yr) reflecting the impact of the closure of Australia's international borders. 

      

Turning to imports, the sharp fall in spending in April (-9.8% or -$3.11bn) was driven by a collapse from services (-42.5% or -$2.77bn) as overseas tourism vanished (-98.3%mth or -$2.75bn) in response to the travel ban implemented by the Federal government. Goods imports weakened by 1.3% in the month as intermediate goods (those used in production) declined by 4.9% to be down by 4.2% over the year, though there were gains from consumption goods (4.0%mth) and capital goods (4.3%mth).   

International Trade — April | Insights 

The full impact of the COVID-19 pandemic was on display in this report as exports and imports were severely disrupted. The goods balance fell by $3.5bn in the month, though the services balance actually advanced by $1.85bn. Clearly, overseas tourism collapsed due to the travel ban, though inbound tourism may be being boosted by overseas students that were already in Australia ahead of the escalation in the crisis. Net exports added 0.5ppt to Q1 GDP, though the details were weak as export volumes fell by 3.5% and imports were down 6.2%.